Important Takeaways:
- The Federal Reserve announced the second consecutive cut in its interest rate benchmark on Thursday, a move widely anticipated by investors.
- The Fed said it will now target a range of 4.50 percent to 4.75 percent for the federal funds rate, the rate banks charge each other to borrow reserves, one-quarter of a point below the target announced in September.
- This marks a moderated approach compared to the Fed’s earlier, sharper 50 basis point cut in September, reflecting a recalibration of monetary policy. The Fed’s decision to announce the larger rate cut in September, just weeks before the presidential election, was widely criticized by Republicans as creating the appearance of inappropriate politicization.
- President-elect Donald Trump’s victory, coupled with expected Republican majorities in Congress, could set the stage for significant shifts in the economic landscape, with potential changes to taxes, spending, immigration, and trade policies on the horizon. This anticipated alignment in Washington has fueled a rally in stocks, with many investors expecting economic growth to be recharged by Trump’s policies.
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Important Takeaways:
- One month ago, when multiple discount retailers were lamenting the sudden collapse in US consumer purchasing power, we observed the reason this unexpected hit to US consumption: as the US personal savings rate had collapsed, the growth in consumer credit was slowing, and in July, credit card debt growth posted its first decline since the covid crash, just in time for another month of record high credit card rates.
- But fast forwarding just one month later, when in a stunning reversal, July consumer credit growth unexpectedly reversed the dramatic June slowdown, and soared more than $25 billion, to a new record high of $5.093 trillion.
- Sure enough, the sudden surge in credit card debt was a big surprise because according to the Fed, the average rate on interest-bearing credit card accounts just hit a new record high of 22.76%, which is a vivid reminder that while banks are happy to hike credit card rates, they rarely if ever cut them.
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Important Takeaways:
- As many as a million jobs could vanish from US jobs data in revised numbers released this week.
- Jobs growth in the year through March was likely much lower than initially estimated, top bankers are warning.
- This could refuel concerns that the US economy is not as robust as it has appeared, and that the Federal Reserve is falling behind in its aim to lower interest rates.
- The government will release its first revisions of jobs growth data on Wednesday, and then the final numbers are due early next year.
- Goldman Sachs economists expect jobs growth for the year will be at least 600,000 weaker than current estimates – and the decline could be as much as a million.
- A downward revision of more than 501,000 would be the largest in 15 years, Bloomberg reported, and would suggest the labor market has been cooling for longer than was originally thought.
- The unemployment rate also edged higher to 4.3 percent – the highest level since October 2021.
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Important Takeaways:
- US job growth in the year through March was likely far less robust than initially estimated, which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates.
- Goldman Sachs Group Inc. and Wells Fargo & Co. economists expect the government’s preliminary benchmark revisions on Wednesday to show payrolls growth in the year through March was at least 600,000 weaker than currently estimated — about 50,000 a month.
- While JPMorgan Chase & Co. forecasters see a decline of about 360,000, Goldman Sachs indicates it could be as large as a million.
- There are a number of caveats in the preliminary figure, but a downward revision to employment of more than 501,000 would be the largest in 15 years and suggest the labor market has been cooling for longer — and perhaps more so — than originally thought. The final numbers are due early next year.
- Once a year, the BLS benchmarks the March payrolls level to a more accurate but less timely data source called the Quarterly Census of Employment and Wages, which is based on state unemployment insurance tax records and covers nearly all US jobs. The release of the latest QCEW report in June already hinted at weaker payroll gains last year.
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Important Takeaways:
- For the past year, the Fed has kept interest rates at their highest level in more than two decades, making it more expensive to get a mortgage, borrow money and pay off debt.
- “A rate cut could be on the table in the September meeting,” Fed Chair Jerome Powell said on Wednesday, immediately jolting markets.
- But some of that luster faded later in his press conference as he repeatedly told reporters that a September cut is by no means a sure shot.
- And if you’re thinking the Fed surely won’t begin cutting in November because of the election, you might want to reconsider.
- The Fed, Powell said, will act in the best interest of the American economy regardless of the timing. “We don’t change anything in our approach to address other factors like the political calendar,” he said.
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Important Takeaways:
- Home foreclosures shoot up 10% amid soaring interest rates, job losses and higher grocery and utility bills eating into earnings – here are the state’s WORST affected
- Home foreclosures are on the up across the US as Americans continue to battle against soaring interest rates and rising costs.
- Last month, 37,679 properties had a foreclosure filing, according to fresh figures from real estate data provider ATTOM – up 10 percent from the month prior.
- Foreclosure occurs when an owner can no longer make their monthly mortgage payments and must forfeit the rights to their property as a result. Foreclosure filings include default notices, scheduled auctions and bank repossessions.
- The figures lay bare a growing housing affordability crisis in the US. But a disparity remains across America, with some states faring much worse than others.
- Delaware recorded the highest number of filings last month, with one for every 2,269 housing units.
- Nevada had the second highest number of foreclosure filings in January – at one in every 2,272 housing units.
- Indiana had one in every 2,499 housing units, Maryland had one in every 2,588 and New Jersey had one in every 2,647.
- Foreclosures have been on the rise since the end of 2021, as banks make up for lost time after state and federal foreclosure bans expired.
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Important Takeaways:
- Average American household now has $10,170 credit card debt – here are the states where balances are highest
- American households now have an average of $10,170 credit card debt, as record numbers say they are worried about being cut off from access to loans.
- Data from the New York Federal Reserve shows nationwide credit card debt swelled by $43 billion in the second quarter of the year – the second largest increase on record.
- Meanwhile a separate survey by the Fed revealed 60 percent of respondents found it more difficult to access credit – the highest level since the data series began in June 2013.
- But some states are faring much worse than others as households in Hawaii have the highest debt currently, according to fresh analysis by WalletHub. Families in the Aloha state have $10,637 in credit card loans on average.
- It was followed by Alaska, California and New Jersey where average debts were $10,142, $9,796 and $9,468 respectively.
- By contrast, Wisconsin has the lowest debts of any state, with the average household owing $6,208 on their cards.
- The interest charged by credit card companies is loosely guided by the Federal Reserve’s benchmark rate which last month soared to a 22-year high.
- It has fueled calls to curb interest on such loans. Yesterday Missouri Republican Sen. Josh Hawley urged the Government to install an 18 percent cap on credit card rates as he hit out at providers.
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Important Takeaways:
- 61% of Americans are living paycheck to paycheck — inflation is still squeezing budgets
- The number of Americans who say they are stretched thin has remained stubbornly high, according to several reports.
- Federal Reserve Chair Jerome Powell recently called for continued vigilance in the fight against inflation, warning there may even be more interest rate increases to come.
- The battle against inflation is not over.
- As of July, 61% of adults still said they are living paycheck to paycheck, according to a new LendingClub report, slightly more than last year’s 59%.
- June and July both saw easing in the pace of price increases, with core inflation up 0.2% for each month, according to the U.S. Bureau of Labor Statistics.
- But in recent remarks, Federal Reserve Chair Jerome Powell said inflation “remains too high” despite those positive indicators, and warned that more interest rate hikes are still possible.
- Central bank officials have already raised rates 11 times, pushing the Fed’s key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years.
- Now, 78% of consumers earning less than $50,000 a year and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in July, both up from a year ago
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Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”
Important Takeaways:
- $30,000,000,000 Exits US Banking System in One Week As Deposit Flight Grows
- According to stats compiled by the Federal Reserve Economic Data (FRED) system, depositors yanked $30 billion out of American bank accounts from May 10th through May 17th.
- That represents an increase of more than $4 billion over the previous week.
- The US banking system now has a total of $17.15 trillion in deposits, compared to $18.03 trillion one year ago.
- The deposit flight follows the failures of three large regional banks – Signature Bank, Silicon Valley Bank and First Republic.
- According to a Federal Reserve report, more than 700 American banks are considered to be facing “significant safety and soundness risk” due to unrealized losses that exceed 50% of their capital.
- In the report, the Fed calls out its own interest rate hikes as the core reason those banks are now in a precarious position.
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Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’
Important Takeaways:
- What the Fed’s rate hike means for your wallet: Quarter-point increase will add $1.7 billion to US credit card bills over the next year
- The Fed on Wednesday boosted its benchmark rate a quarter percentage point, to a range of 4.75 percent to 5 percent, its highest level in 16 years and up from near zero a year ago.
- The latest rate increase will cost American credit card users a collective $1.7 billion in added interest charges over the next 12 months, according to a study from WalletHub.
- That’s on top of the $30.4 billion more in credit card interest charges the study chalks up to the Fed’s prior rate hikes since last March, when the central bank’s policy rate was near zero
- Government data shows that the amount of consumer loans, including credit cards and other revolving plans with commercial banks, soared to $965.6 billion on March 8. That’s up from $830 billion at the same time last year.
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